Buying a tenanted house TPC – Practice Q25


How is it different between buying a tenanted house compared to an empty house?


When a property is bought with tenant, it can be:'

  1. Vacant possession - that is when the tenant moves out only the house is sold.
  2. Legal possession - that house is sold while tenant is staying inside.

Vacant or legal possession 

The SPA will provide for vacant or legal possession of the Property to be delivered by the Vendor, upon full payment of the Balance Sum by the Purchaser. Where the Property is sold subject to an existing tenancy, the name and particulars of the tenant together with the amount of the monthly rent ought to be mentioned in the SPA. It is prudent for the Purchaser to obtain a copy of the tenancy agreement, if any, to check for any onerous terms.

Where the sale is subject to vacant possession, it is the responsibility of the Vendor to deliver vacant possession. If the sale is without vacant possession and subject to an existing tenancy, there should be provisions in the SPA for the assignment of the tenancy and the handing over of deposits. Notice of the sale should be given by the Vendor to the existing tenant. The SPA should also provide that the rent paid for the last month of the Completion Date should be pro-rated as at the date of payment of the Balance Sum by the Purchaser.

In some cases, the parties may agree that the Purchaser may take vacant possession of the Property prior to the payment of the Balance Sum. Sometimes a monthly sum is payable by the Purchaser to the Vendor pending the completion of the transaction. This arrangement ought to be included in the SPA. In such a case, the Purchaser may be required to pay the quit rent, assessment, service charges, insurance and other charges of the developer (where applicable). Proper provisions for this in the SPA will avoid any dispute.